We Can Do Better Than Capitalism

Entrepreneurs in all walks of life are showing that it’s possible to create companies with business models driven by social purpose.
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In the U.S., 64,000 companies are structured as “cooperatives” set up to benefit workers, members, consumers, and the broader society.

Photo by Tom Werner/Getty Images

In our capitalist economy, business enterprise is controlled by capitalists, of course, and structured to bring highest return to shareholders. We’re all supposed to love this setup because competition among companies gives us ever cooler products and always better deals. Right?

But, wait a minute. … Where is the competition?

Over just the past 15 years, mergers have proliferated so quickly that in 12 major industries just two companies now control more than half the market. Economists warn us this level of concentration kills competition—not to mention bringing with it an erosion of wages, as monopoly weakens competition for workers too.

Since monopoly power compromises capitalism’s supposed virtues, it’s time we ask: Can we find better ways to structure business? Clearly, business driven by highest return to existing wealth leads inevitably to concentration and, consequently, to ever-worsening inequality. In America today, three people control as much wealth as the bottom half of us, says Forbes.

So, are we stuck in this deadly spiral toward ever greater concentration of economic power?

No, we can do better. We know we can because some of us already are.

Americans in all walks of life are creating companies with business models driven by social purpose, not just their own pocketbook priorities.

In the U.S., for example, 64,000 companies are structured as “cooperatives” set up to benefit workers, members, consumers, and the broader society.

In early 1993, for example, I interviewed one such “cooperator,” Florinda DeLeon, who just a few years earlier had been a single parent raising three children in the Bronx on welfare benefits. Then, her life changed radically: DeLeon became one of 170 co-owners of a then-new cooperative called Community Home Care Associates. Soon thereafter, she enjoyed decent pay, health benefits, and paid vacation.

“Being a worker-owner means we decide what’s best for us,” she told me.

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I’ve never forgotten DeLeon’s story, and certainly have hoped all these years that her co-op had survived. Then, last week in Wisconsin, I was treated to a huge surprise.

At a gathering focused on the value of cooperatives, I met CHCA’s current director, Adria Powell. I learned that her home care co-op now has more than 2,000 workers, making it the largest worker-owned cooperative in the country. I was amazed.

Other CHCA brag points?

Not only do CHCA’s workers earn superior wages (roughly twice the market rate) compared to employees of private home-care agencies, but they hold on to their jobs longer, with turnover at only 15 percent, compared to the industry average of 40 percent. Clearly, home health care is a tough job, especially without adequate pay and benefits.

At the same gathering in rural Wisconsin, I was reminded a second time of my failure to foresee the breakthrough success of another noncapitalist enterprise: Organic Valley dairy cooperative, the organizer for the event.

In the 1980s, many Midwest farms were going under and there had been a rash of farmer suicides. In 1988, near where we were meeting last week, I’d huddled with a handful of farmers who wanted to help themselves and their struggling neighbors. The goal? A dairy cooperative that could help extend organic farming practices while helping buffer farm families from the ravages of the farm economy.

I thought, “Oh, how sweet … these guys care enough to help their neighbors in trouble.”

A bit condescending? Yeah, I’ll admit it.

Now, three decades later, I feel downright silly. I failed to imagine what this cooperative would become. The courage, compassion, and vision of these determined dairy farmers would build a billion-dollar business, today benefiting more than 2,000 family farms in 35 U.S. states, and beyond.

Many people reading this might think that cooperatives are positive but almost irrelevant in light of the power of the dominant capitalist model. To those people, I urge you: Don’t fall into the trap I did.

Worldwide, one in 10 employed people works in a co-op; and 1 billion in 96 countries are members of coops—no doubt a number greater worldwide than those who own shares in publicly traded companies. Or consider that the total sales of cooperatives worldwide comes to about $3 trillion, a sum that is equal to the total equity ownership of the five global tech giants: Apple, Google, Microsoft, Amazon, and Facebook.

In one of Italy’s most prosperous regions, Emilia Romagna, roughly 30 percent of the economy is generated by cooperatives. With almost 4.4 million people, this region enjoys one of the highest per capita GDPs in Italy.

Co-ops are hardly niche.

Beyond cooperatives, U.S. entrepreneurs are creating other forms of values-driven enterprise. For instance, roughly 5,400 companies are now incorporated under a new legal structure, the “Benefit Corporation,” committed to generating a public benefit beyond profit—from environmental sustainability to employee health care.

Outdoor clothing giant Patagonia is an example. While Americans each throw out 81 pounds of clothing each year—almost all of which could be reused—Patagonia commits to repairing and taking back any item it sells.

Of course, I’m not suggesting that these emerging businesses will end the devastation of brutal capitalism, now leaving one in five Americans with no net worth to fall back on. We must reclaim the lost tradition of “trust busting” and enforce other anti-monopoly rules, remove obstacles to union organizing, seriously address tax-law injustices and much, much more.

What I am suggesting is that we celebrate that the profit-driven-only capitalist enterprise is not the only game in town. And, in our economic lives, we can actively support those enterprises accountable not to wealthy shareholders, but to their workers, the environment, and the community. As citizens, we can step up to ensure changes in the rules that govern our economy, enabling the possibility of an economic democracy.

This article was originally published by Common Dreams. It has been edited for YES! Magazine.